Dear stakeholders,

2017 has been a year of accelerated commercial activities all around the world which brought along growth. These developments had a positive effect on global trade and countries have increased their exports in 2017. In Turkey six industries managed to set the export records of all times.

Global inflation which has been low in general terms is in an increasing trend and some countries have achieved their inflation targets while others have not been able to reach theirs. The recovery in material prices has affected manufacturers’ costs while inflationary pressures on consumer price levels have been limited. Increase in raw material prices has supported the revenues of oil producing and exporting countries and this had a positive effect on public finances of those countries. Lack of inflationary pressures has led the central banks to maintain their expansionary monetary policies. We observed that this had an impact of strengthening of risk appetite and an increasing flow of capital into the emerging markets. Turkey has managed to receive funds of USD 10 billion from the international investors, USD 7.3 billion in the form of government bonds and USD 3.2 billion of corporate stock acquisitions.

USA, the largest economy in the world has reached a gross product of nearly USD 20 trillion and Fed has continued to increase interest rates as a result of the strengthening economy. At the same time they started the process of reducing their balance sheet which had reached USD 4.5 trillion. Fed announced a one and a half year balance sheet reduction calendar. As a result of this program, Fed aims a balance sheet magnitude of USD 4 trillion by the beginning of 2019. Stock markets around the world have recorded an approximate growth of 20% while Borsa İstanbul has managed an increase of nearly 50%.

European Central Bank (ECB) has continued to adopt its “lower for longer” approach. Without an inflationary pressure, ECB decreased the amount of asset purchases while extending the terms. Easing of the political conjuncture in Europe had a positive impact on commercial activities and the confidence indices have reached their maximum levels since 2000. In 2017, with increased employment rates combined with favorable financing conditions, European economy has reached its maximum growth after the crisis. Europe, being Turkey’s largest commercial partner, our economy has also been impacted in a positive way.

China, the second largest economy in the world, has continued their process of integration to global system with their “One Belt One Road” project. China has changed their growth model by focusing on consumption rather than investment, has given priority to stability and balanced their risks in the global economy. In this context, Turkey opened the Kars-Tbilisi-Baku railroad.

In addition to favorable global conditions, Government’s “Employment Campaign” has led to employment opportunities for more than 1 million citizens. Lower unemployment had a positive impact on the development of economy, public finance and asset quality of banking industry. Credit Guarantee Fund program, which focuses on industry and manufacturing, SMEs which did not have access to finance due to guarantee problems, were provided with financing options. Tax reductions on various appliances and durable goods which targeted the improvement of household living conditions supported the internal demand.

Global conditions combined with the appropriate internal policies led to a record growth rate of 11.1% of Turkish economy in the third quarter.

Turkish banking industry has continued its stable growth in 2017 with a high quality of assets and strong equity structure. The industry is advancing to increase efficiency. In addition to that, banking industry has access to capital and subordinated loan opportunities, particularly syndication loans and can use these effectively. Turkish banks have supported the growth of our economy through loans provided with the guarantees of Credit Guarantee Fund and increase in consumer loans.

In participation banking industry, our priority strategy is providing effective resources. Our target is to increase the share of participation banking in the banking sector as well as increasing the share of Turkey in the global participation banking industry while bringing in both domestic and foreign savings into the economy.

As the first publicly funded participation bank in Turkey, Ziraat Participation targets developing new products which provide the best solutions to its customers’ needs. Our main strategy has been “Growth through increase in share of participation banking in finance sector”. Accordingly, we continue to increase the number of our branches, focus on our principles of working efficiently and increasing our effectiveness in this sector.

On behalf of myself and our Board of Directors, I would like to express our gratitude to all our employees who have contributed to our successful performance in 2017 and our customers who have preferred to work with us.

Continuous support and preference of our stakeholders will help Ziraat Participation crown its journey to its mission with new successes.

Kind regards,

Hüseyin AYDIN
Chairman of the Board